In part two of this blog we will talk just a little about tax preparers other than CPA’s, Attorney’s, and EA’s. We will also discuss some recommendations and conclusions about who you should use for your income tax preparation and how you should decide on them.

The last choice I feel are the chain tax preparation companies. The tax preparers working for this firms are often less highly trained. They usually work only a portion of the year and have a lower experience level. That said, I know some individuals working for chains (usually in specialty offices) who are superb tax preparers. Once again, it can be too difficult to identify who those individuals are and they are few and far between. The chains are also usually slightly more costly to go to as they have generally higher overhead than other preparers due to the large corporate structure. The GOA did a study a few years ago where they found that the chains made errors in 100% of the returns they tested them on. That does not sound like a great selling point to me. While these “test” returns are often complicated and a majority of tax preparers make errors on them, the chains made errors on 100% and made some grievous errors in judgment preparing those returns such as 100% of them did not refer to the previous year tax return. I just do not know how you can feel good about that.

Other tax return preparers often do not have nearly as much experience or education as CPA’s, EA’s, or attorneys. They also are not required to have as significant an amount of continuing education each year.

So my advice is usually to avoid those tax return preparers who do not have the professional designations referred to above. On the other hand I do know some tax preparers who do not have those designations who are excellent preparers and are committed maintaining their education and do good work. They are just rarities and are very hard to find.

I strongly recommend CPA’s (since I am one) and EA’s. These individuals have made a strong commitment to be a professional. They are usually available year round to assist you in tax and other financial matters. You should talk to either one ahead of time to assure that they have appropriate experience dealing with tax returns and business situations like yours.

Unless you have a legal problem, I rarely refer to attorney’s for standard tax preparation due to the high cost. But attorney’s can be a requirement for certain serious problems.

How to find a tax preparer creates some more challenges. While I recommend that you ask some trusted friends for referrals, I do not recommend that you ask your friends or barbers or hairdressers for tax advice. I would more likely recommend you ask for referrals from your banker, insurance agent, or lawyer. A CPA will often also refer you to a very qualified preparer if they are not the right individual to prepare your return. You can also check with professional organizations such as the Colorado Society of CPA’s who maintains a referral page on their website. Then interview the possible preparer asking questions about what kind of continuing education they obtain and how much experience they have with issues like yours.

You should further ask questions to determine how interested your preparer is in your success and your future. Income tax preparation should lead to tax and financial planning for you. Make sure your preparer is someone you can work with in various aspects of your financial life.